This copy is for your personal non-commercial use only. To order presentation-ready copies of Toronto Star content for distribution to colleagues, clients or customers, or inquire about permissions/licensing, please go to: www.TorontoStarReprints.com

Sears sells stake in 8 properties but stores to stay open

Sears Canada shoppers can expect to pick up bargains in the weeks leading up to Christmas as the retailer prepares to close stores in the GTA and London in February, according to spokesman Vince Power.

Liquidation sales are underway at the Sears stores at Yorkdale Mall and Square One in Mississauga, and deep discounts can be expected at Sears in the Eaton Centre, Masonville Place in London, and Sherway Gardens in Etobicoke before and after Christmas, he said.

Though it's selling its 50 per cent stake in eight properties across the country, Sears says its stores at those locations will continue to operate. (Frank Gunn / THE CANADIAN PRESS)

The stores will close in early February.

The Eaton Centre, Sherway Gardens and Masonville Place stores are stocked with new goods for the Christmas season, said Power.

“There will be some very good values there,” he said.

Article Continued Below

The bargains for consumers come at a cost of nearly 1,100 jobs lost at the five stores. Sears has said it is trying as much as possible to find jobs at other locations for those working in stores slated for closure.

The Markville Shopping Centre store in Markham will not close until Feb. 2015.

Sears Canada also announced Monday that it has sold its 50 per cent joint venture interest in eight properties it owns with The Westcliff Group of Companies for approximately $315 million. The deal with Montez Income Properties Corporation is expected to close on Jan. 8, 2014.

Sears is selling its share in joint ventures in four regional shopping malls with Sears stores, in Drummondville, LaSalle, Saint-Jean-Sur-Richelieu and St. Jérôme.

The stores will continue to operate as usual. Westcliff will continue as 50 per cent owner and exclusive manager of the properties.

Article Continued Below

Sears is also selling ownership in properties in two strip malls and two open air malls in Quebec where it does not have Sears stores.

“As we have previously stated, unlocking the value of assets is a lever we use as a way to help create total value,” said Doug Campbell, president and chief executive officer, Sears Canada Inc., in a statement released Monday morning. “The joint venture assets we are selling to Montez impact neither our store operations nor our ability to serve customers. As such, our primary focus in creating long-term value remains on the basics of the business and continuing to become more relevant with Canadians coast to coast.”

In a note released to investors after the announcement, retail analyst Keith Howlett of Desjardins Securities pointed out that in the first half of 2013, Sears Canada generated a loss from retailing operations before tax of $56.9 million, and a profit before tax from joint venture real estate investments of $5.8 million.

He still expects Sears Canada will pay a special dividend to shareholders before the end of 2013, perhaps as high as $6 a share, given the amount of money the company has made on real estate. But according to his note, the long-term prospects of the company seem gloomy.

“In our view, Sears Canada remains a speculative investment as the company continues what we characterize as a two-prong agenda of selling assets and disbursing cash to shareholders while simultaneously attempting to return its struggling and shrinking retail business to profitability. The probability of a return to profitability appears relatively low, in our view, given recent management turnover, under-investment in the business over the last eight years and intensifying competition.”

More from The Star & Partners

LOADING

Copyright owned or licensed by Toronto Star Newspapers Limited. All rights reserved. Republication or distribution of this content is expressly prohibited without the prior written consent of Toronto Star Newspapers Limited and/or its licensors. To order copies of Toronto Star articles, please go to: www.TorontoStarReprints.com